Selling vacant lots and empty dreams?

New Vista Properties Inc. has continued to sell vacant lots in the epicenter of the downturn to buyers for more than 10 times true market value, an analysis shows

By JOSH SALMANjosh.salman@heraldtribune.com

Robert Ehrling and Richard Reizen spent two years in prison for their roles in the fleecing of customers out of $117 million in sales on overpriced property in nine counties, including Sarasota and Charlotte.

More than two decades have passed since then, but the marketing tactics that the men honed at the now-defunct General Development Corp. apparently have not changed.

Despite a painful housing slump that stalled real estate across Southwest Florida, New Vista Properties Inc. has continued to sell vacant lots in the epicenter of the downturn to buyers for more than 10 times true market value, a Herald-Tribune analysis of property records shows.

As values began sliding in 2007, Ehrling and Reizen's Miami Lakes company, New Vista Properties, accelerated sales efforts and hiked prices to levels that nearby homes were fetching.

Since its inception in 1999, New Vista has convinced thousands to buy a slice of paradise in North Port and Port Charlotte through a series of attractive brochures, trips to Florida and aggressive sales seminars — tactics that General Development perfected in the late 1980s.

Like that company once headed by Ehrling and Reizen, whose 1993 convictions were overturned in 1996, New Vista targets buyers new to the United States through a heavy marketing presence in New York.

"This is pure Florida in many ways," said Gary Mormino, a retired professor of history at the University of South Florida, who studies Florida's real estate cycles. "Florida is the perfect state for Ponzi schemes and real estate scams."

Neither New Vista nor its executives have been charged with any crime.

Ehrling did not return several phone messages left with his office seeking comment. A New Vista collections manager declined to elaborate on the company's operations.

The Herald-Tribune's analysis showed that New Vista inflated the price on 458 vacant lots that the company has sold since the start of 2009, a year considered the peak of Florida's housing crisis.

In all, New Vista collected $16.45 million from those purchases, or an average of $35,917 per lot, records show. The company generated even more income from interest on internal mortgages which are tied to those sales and aren't scrutinized by regulators.

The lots that New Vista sold ranged in price from $18,000 to $55,000. Their value, as estimated by the Sarasota County Property Appraiser's office, peaked at $4,000.

When buyers default on New Vista financing, the company often forecloses to regain control of the land and resell it. One-fifth of New Vista's buyers have lost their overpriced lots to company-initiated foreclosures, court documents show.

Observers fear the operation could have widespread ramifications — with the potential to skew the healing real estate market with artificial prices.

Too tempting to resist

For Sandra Nedd, the New Vista pitch was too hard to resist.

She saw a way to escape New York's bone-chilling winters in favor of sandy beaches and a climate more akin to her native Tobago.

Buying her own piece of real estate in Southwest Florida, just miles from multimillion-dollar estates, would mark a new beginning for the 51-year-old single grandmother and administrative aide.

The salesman told Nedd the quarter-acre lot would be waiting for her in retirement. Buoyed by visions of someday building a custom home there, she gave him $6,010 in June 2011 as a down payment.

She had never before heard of North Port, but the pictures at the sales seminar were beautiful.

Nedd bought into the same dream of paradise that built Miami during the land boom of the 1920s, Cape Coral in the '50s and Port Charlotte a decade later — as developers targeted soon-to-be retirees who longed for a carefree life under the Florida sun.

What Nedd did not know is that the vacant parcel she had financed with the seller for $23,990 — which brought the total purchase price to $30,000 — was worth $3,300 last year, records show.

It has no water or sewer connections. The nearest public beach is almost an hour's drive away.

Like Nedd, most of New Vista's buyers are relatively new to the U.S. and originally from places like Jamaica, Trinidad and Latin America. In many cases, their understanding of English is rudimentary.

How it works

Buyers, former employees and competing real estate brokers say New Vista uses a satellite office in Queens, New York, to attract customers with grand visions of Florida property ownership.

The company's seminars portray North Port as a community anchored by estates, beaches and a bustling entertainment scene, those familiar with them say.

New Vista's website depicts a similar lifestyle, through images of fishermen, beachgoers, canals — and the tag line "The Florida that dreams are made of ... all within your means."

Last year, more than 100 buyers signed up.

Many bought undeveloped lots immediately following a sales seminar in New York. Some who remained undecided were then flown to Punta Gorda, where they were put up in a hotel and given guided tours of the region.

"They spend a lot of time and money targeting people who do no due diligence," said Dennis Black, a Port Charlotte real estate consultant. "By using this seminar, mass mailing and brochure stuff, it is a matter of numbers. You get 100 people in a room. Ninety walked out, but 10 didn't."

New Vista began selling vacant lots in North Port and Port Charlotte in 1999, fueling the inflation that would ultimately lead to the Southwest Florida's historic housing slide eight years later.

But even after the market tumbled in 2007, New Vista was able to find a buyers willing to pay nearly as much for vacant lots as others were for completed homes in the surrounding area, the newspaper's analysis determined.

In all, New Vista controls more than 4,800 platted parcels in North Port and Port Charlotte, property records show.

The company acquired about 3,000 lots from Atlantic Gulf Communities, an entity that emerged from General Development's bankruptcy, only to file for bankruptcy protection itself in 2001.

New Vista paid $1.5 million for that land in January 2001, property records show.

The company also bought 375 lots from Preferred Equities Corp. a year later, for $889,200.

In 2006, New Vista bought 253 lots in North Port from Sarasota County during a massive government auction — these were mostly parcels abandoned by former General Development buyers who stopped paying their taxes.

The firm has since picked up hundreds of additional lots through auctions and from other private landowners.

"They own vast amounts of land, and they're making a fortune," said Paul Forsberg, a real estate investor who also runs a real estate brokerage in North Port and is familiar with New Vista. "They can get away with it because they have really convincing marketing, and they find people who have no other way to buy."

The company usually requires about 20 percent down, then creates five-year mortgage notes bearing interest of 8 percent to 10 percent, court records show. Those interest rates are more than double the industry average.

If buyers fall behind on their monthly payments, New Vista forecloses and resells the property. Since January 2009, the company has repossessed 94 lots, court records show.

Many of New Vista's buyers are new to the U.S., and did not have permanent mailing addresses at the time they bought their lots. They often list New Vista's corporate address in South Florida as their own on mortgage papers.

"I just don't know how they get away with it," said Maggie Dasilva, a Realtor with Re/Max Anchor Realty in North Port. "You can buy a town house for those prices. Lots are only selling right now at a discount, and it's mostly developers buying them up by the dozen and giving them away for free with a home."

Jennifer Nestor is a typical New Vista buyer.

The 48-year-old nurse from Kingston, Jamaica, paid $30,000 for a quarter-acre parcel in North Port in 2011, putting $6,010 down. Tax records from 2012 show the property last year was worth $2,300.

Weldes E. Oliveira bought the same lot from New Vista in April 2005. Oliveira paid $43,000, financing $34,392 and giving the company $8,608 as a down payment.

But two years later, after writing New Vista $540 mortgage checks for months, Oliveira stopped paying. New Vista foreclosed and took control of the property in 2008, later selling it to Nestor and restarting the cycle.

"They're picking on a specific demographic that's extremely naive and unfamiliar with their background," said Jack McCabe, a real estate consultant in Deerfield Beach. "They might not have a smartphone or be able to do Internet searches."

Buyers who are able to pay off their New Vista loans still have to come up with thousands of dollars before they can even consider building. That is because required infrastructure — water, power and road access — costs about $20,000 per lot, exclusive of the cost of home construction.

Bryan Holland, North Port's building official, said many land buyers come into his office to find lots they have acquired from sources like New Vista — land they have never actually seen.

Most are disappointed to learn how much money stands between them and building a home, he said.

"The real problem is because North Port is incorporated as a city, buyers just don't think of a 100-mile stretch of area," Holland said. "Unless you're within that first 10 or so miles, you're in no man's land. They buy these properties never knowing that. It's a real shame."

Some history

Reizen and Ehrling, the two men behind New Vista, are no strangers to Southwest Florida real estate.

A quarter-century ago, business for General Development soared, until the government in the early 1990s accused it of defrauding 10,000 buyers by adjusting appraisals to boost values by as much as 500 percent.

The company did so by valuing homes based solely on prior company sales, then hiking mortgage costs through a lending subsidiary.

Their convictions were ultimately overturned on appeal, but the company was ordered to pay $169 million in restitution to homebuyers.

Like New Vista, General Development focused mainly on out-of-state buyers with attractive brochures, home-buying seminars and trips to Southwest Florida.

"It's the same model General Development ran up north," said Raymond Kransinski, a certified appraisal instructor in North Port. "It's the same thing all over again.

"Even on a speculative basis, there's nothing out there that would justify these values," he added.

"But there is also no law or regulation that prevents you from being a fool."

Appraisers say New Vista buyers would have realized the discrepancies in values if they had obtained a third-party appraisal before signing any papers. Such appraisals typically cost about $300 for a vacant lot.

But a quick Internet search also could have provided actual North Port land prices. During the past six months, the average dry lot in North Port sold for $3,245, according to the My Florida Regional MLS system.

"There's an awful lot of auction sites down there and distressed lots you can get for pennies on the dollar," said Tom Heatherman, a spokesman for regional real estate brokerage Michael Saunders & Co. "North Port is like one big vacant lot. There are just tracts and tracts of land."

No charges pending

The law that regulated land sales in Florida was repealed in 2008, a move that pushed consumer-related complaints to the federal government.

Five buyers have filed complaints against New Vista. Of those, two have received refunds. Two other complaints were filed after deregulation went into effect, leaving Florida officials with no jurisdiction, according to the state Department of Business and Professional Regulation.

The division issued New Vista a warning letter after the fifth complaint, state records show.

The federal agency tasked with oversight of companies like New Vista did not respond to Herald-Tribune requests for complaint records.

Meanwhile, there have been no federal lawsuits filed against New Vista, records show.

Sarasota County Property Appraiser Bill Furst is among those who believes New Vista appears to be operating within the law.

"These deals may seem outrageous," Furst said. "But on the other hand, you have a buyer and a seller, and both agreed to the price."